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Disrupt Yourself Podcast E P ISODE 221: CHRIS YEH Welcome to the Disrupt Yourself podcast, where we provide strategies and advice for how to climb the S curve of Learning™ in your professional and personal life, disrupting who you are now to slingshot into who you want to be. I'm your host, Whitney Johnson. Before I introduce our guest today, if you haven't already, will you take a moment and leave a review on Apple? I continually receive emails from you telling me how useful these interviews are, and I'm confident that others will find them useful, too. But they can't listen to them if they don't know they exist. Your leaving a review signals to the algorithm boards and other podcast listeners, "Pay attention." And I would personally be very grateful. Now, today, our guest is Chris Yeh. He's a writer, investor, and entrepreneur who has not only had a ringside seat in the world of startups and scaleups for 25 years, he has been in the ring. Chris Yeh has coauthored two books with Reid Hoffman, the founder of LinkedIn, the latest book being Blitz Scaling, that talks about how companies like Amazon, Alibaba and Airbnb were built in record time. Whitney Johnson: I would like to start with a crucible moment, a moment where you felt like, "When I look back at this, this is going to be a defining moment for me as a leader," or even just for you as a human being, an individual. What would be that moment? Chris Yeh: I always remember this moment very distinctly because it occurred for my first big startup win. So, back in the 2000s, I got involved with a company called Ustream, which is a pioneer in the live video streaming space, and eventually went on to be acquired by IBM. And during those early days, I came in as the first investor and also as the interim CEO to help get the company off the ground. And one of the things that happened is we had the opportunity to suddenly hire away this very experienced engineering team in an Eastern European country that was one of the leading engineering teams in the world in handling live video. And they said, "We will only jump ship if you, in fact, can show that you have $250,000 in the bank. 1 Now, that doesn't sound like a lot, but at that point, the company was operating off my credit card. And so, it was a significant amount of money. And I remember at that moment saying, "OK, here's what's going to happen. I'm going to quit my job," because I had a different job as an executive at that point in time. "I'm going to quit my job and I'm going to go to everyone I know and I'm going to raise $250,000 over the weekend. And then on Monday, we'll give you the answer and tell you that we can hire you." And that's precisely what we did. And this was a big step, because even though I had been an entrepreneur before, I had not approached people I knew for investment and people knew that. And I said, "Listen, I'm approaching you now because I think that this is a huge opportunity. I think it's going to be successful. Of course, there's never any guarantee. But as you know, I've never come to you before and I'm coming to you now." And I was able to raise that money. We were able to hire those engineers. They formed the core of the engineering team. And ultimately, IBM bought the company for 130 million dollars. Whitney Johnson: I love that story. And now I want to know, why. Chris, why was this a crucible moment for you? So, you look back at it. It's a great story. What's the meaning that you make of it? Chris Yeh: So, the meaning I make of it is that it's very rare that the decisive moments in your life come to you labeled as such. Far more often, they come to you and you don't even realize they're going to be a decisive moment. But this was one that was coming in, labeled as a crucible moment, literally had a sign, "Hi. I'm a crucible moment." Because I had a high paying job as an executive at a startup company with a lot of funding. And I was doing this on the side and my thought was, "Well, I could continue doing this on the side. And there are founders to run the company, and I can avoid taking on a lot of personal risk," because I don't like taking risk. I know it's funny for someone in the startup world, but personally I'm like, "I'm happy with uncertainty. I'm not happy with downside." And it was a big moment to say, "Is this the thing I want to bet on?” Not just by quitting my job, which is a big deal, especially at young children and bills to pay, but also in the sense of going to everyone I knew and asking them for money? And I had to make a decision in that moment, "Am I all in or not?" And that's what made it a crucible moment. It was a "I'm going to take a leap off the cliff," as my coauthor Reid Hoffman often says, "and build the airplane on the way down." Whitney Johnson: And what I love about this is, um, we're going to talk about your book Blitz Scaling in just a minute. And what I love about this is that this was in many ways a blitz scaling moment for you personally. And so, let's now talk about what that is. You coauthored this book. It's now been a year or two. Was this 2020 that this was published? Chris Yeh: Astonishingly enough, the book came out in 2018. So, we are coming up in the fall on the two-year anniversary and it's been quite a whirlwind. Whitney Johnson: You set the premise of this book, which I love this provocation in one of your videos, if you want to, 50x employees, 94x your customers and 322x your revenue, you will blitz scale. So, can you define for us what that means if you're a company? What is blitz scaling? Chris Yeh: So, the simple definition of scaling is prioritizing speed over efficiency in the face of uncertainty. And the reason it's so important is we live in a world where more and more of the markets that we operate in are "winner take most markets," and that's primarily because we're all connected together by the Internet, so there are more network effects. It also is the fact that things tend to be more global. Used to be every town had its own little set of winners and now there tends to be one global winner. So, the stakes are higher than ever before. And if it's a race to E 221: CHRIS YEH be the winner in a "winner take most" market, then you have to go faster than the competition. It's like 100-meter dash and you're racing against Usain Bolt. You better be running as hard as you can. And part of the way that EPISOD startups are able to run so hard is by being willing to sacrifice efficiency to take on the risk, much like that crucible moment that we just described. Whitney Johnson: Is there an example of a company that you can share with us that people will say, "Oh, yeah, I know that company, that blitz scaling moment." So, we've had the individual Chris Yeh blitz scaling moment. What's a company moment? | DISRUPT YOURSELF 2 Chris Yeh: Well, there's an amazing story that we opened the book with, which is the story of Airbnb. Now, obviously, these days, everyone knows Airbnb is worth around a 100 billion dollars, massive success, but this was much earlier in the history of the company. It was when the company was just 30 people in San Francisco and it just operated in the United States. It wasn't operating globally yet. And that was when they discovered that the Samwer brothers in Germany who run Rocket Internet had created their own Airbnb clone for Europe, and this was a company called Wimdu. And the Samwer brothers said, "Hey, we are funding this company with 100 million dollars. We're hiring 400 people. We're going to expand all across Europe and we're going to dominate this European market. And if you want, we can merge right now, and you give us 25 percent of the company and you can have what we have as well." And that was one of those crucible moments for Brian Chesky and his co-founders at Airbnb, which is, "What do we do? Here we are. We're a small company. We've raised something like 20 or 30 million dollars. And here we have a competitor run by these guys who are billionaires who have raised 100 million dollars and are literally 10 times our size. What do we do? Because if we let them take over Europe and dominate Europe, it's game over because this is a travel company.